38 CFR §36.4350 — Servicing procedures for holders
38 CFR §36.4350 sets the VA loan-servicing program requirements for holders.
Verbatim regulatory text
Verbatim provisions from 38 CFR §36.4350 — Servicing procedures for holders — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
38 CFR §36.4350(a) — Establishment of loan servicing program meeting industry standards
(a) Establishment of loan servicing program. The holder of a loan guaranteed or insured by the Secretary shall develop and maintain a loan servicing program which follows accepted industry standards for servicing of similar type conventional loans. The loan servicing program established pursuant to this section may employ different servicing approaches to fit individual borrower circumstances and avoid establishing a fixed routine. However, it must incorporate each of the provisions specified in paragraphs (b) through (l) of this section.
38 CFR §36.4350(c) — Annual interest/tax statement before February 1
(c) Statement for income tax purposes. Before February 1st of each calendar year, the holder shall furnish to the borrower a statement of the interest paid and, if applicable, a statement of the taxes disbursed from the escrow account during the preceding year. At the borrower's request, the holder shall furnish a statement of the escrow account sufficient to enable the borrower to reconcile the account.
38 CFR §36.4350(f) — System for servicing delinquent loans
(f) System for servicing delinquent loans. In addition to the requirements of the Real Estate Settlement Procedures Act , concerning the duties of the loan servicer to respond to borrower inquiries, to protect the borrower's credit rating during a payment dispute period, and to pay damages and costs for noncompliance, holders shall establish a system for servicing delinquent loans which ensures that prompt action is taken to collect amounts due from borrowers and minimize the number of loans in a default status. The holder 's servicing system must include the following:
38 CFR §36.4350(i)(1) — Property inspections before 60th day of delinquency
(1) The holder shall make an inspection of the property securing the loan whenever it becomes aware that the physical condition of the security may be in jeopardy. Unless a repayment agreement is in effect, a property inspection shall also be made at the following times:
38 CFR §36.4350(f) — System for servicing delinquent loans — enumerated items (chapeau recall fix)
(1) An accounting system which promptly alerts servicing personnel when a loan becomes delinquent; (2) A collection staff which is trained in techniques of loan servicing and counseling delinquent borrowers to advise borrowers how to cure delinquencies, protect their equity and credit rating and, if the default is insoluble, pursue alternatives to foreclosure; (3) Procedural guidelines for individual analysis of each delinquency; (4) Instructions and appropriate controls for sending delinquent notices, assessing late charges, handling partial payments, maintaining servicing histories and evaluating repayment proposals; (5) Management review procedures for evaluating efforts made to collect the delinquency and the response from the borrower before a decision is made to initiate action to liquidate a loan ; (6) Procedures for reporting delinquencies of 90 days or more and loan terminations to major consumer credit bureaus as specified by the Secretary and for informing borrowers that such action will be taken; and (7) Controls to ensure that all notices required to be given to the Secretary on delinquent loans are provided timely and in such form as the Secretary shall require.
38 CFR §36.4350(i)(1) — Property inspections before 60th day of delinquency — enumerated items (chapeau recall fix)
(i) Before the 60th day of delinquency or before initiating action to liquidate a loan , whichever is earlier; and (ii) At least once each month after liquidation proceedings have been started unless servicing information shows the property remains owner-occupied.